How Does ICT Mentorship Core Content Month 10 Build Stock Buy Watchlists?

TL;DR

Build an ICT stock buy watchlist by first confirming that the market is technically poised to rally, then selecting higher-low stocks during the February-to-May or October-to-January bullish windows. Compare candidates with the Dow, S&P, and NASDAQ, use index SMT to identify relative strength, and narrow the Dow 30 to two to four companies. Read on for the filters, signals, and 2017 examples.

Transcript

foreign welcome back lesson two of the ICT mentorship June 2017 content this is ICT stock trading building by watch lists okay so what we have in front of us is the list of the Dow Jones Industrial composite stock list this is all 30 stocks that presently make up the Dow Jones Industrial Average and this discussion is going to be highlighted just a... Read More

Key Insights

• Building a buy watchlist starts with two filters: confirming the overall stock market is technically poised to rally, and then selecting stocks that have made a higher low during seasonally bullish months.
• The February-to-May and October-to-January windows are described as the ideal periods for long swing setups, so buy watchlists should focus on bullishness in the first and second halves of the calendar year.
• Index SMT works by comparing the three major averages: when the NASDAQ, S&P, and Dow are making lower lows and one average fails to post a lower low, it signals a trend change to bullishness.
• A strong stock shows relative strength by refusing to make a lower low when the Dow Jones makes a lower low, which only happens when large institutions sponsor buy programs and accumulate shares.
• Safe or unexciting stocks like Verizon, GE, and Coca-Cola should be avoided; in the presenter's opinion Microsoft and Intel also belong on that excluded list because they are no longer exciting.
• Fair value gaps act as discount arrays: several filtered stocks gapped up in January, traded back down to close that gap in February, then rallied away, offering a discounted entry.
• A low resistance liquidity run anticipates price breaking through an old high or low; stocks too extended from weekly or daily market structure are eliminated because entries there produce lethargic price action.
• Quarterly increases in sales and profits keep a stock on the list, blending seasonal, fundamental, and technical factors into one process for selecting possible winning stocks.

Questions & Answers

Q: What is the ICT method for building a stock buy watchlist?

First, determine whether the stock market is technically poised to rally. During bullish months, select stocks that form a higher low while the major indices decline, then use index SMT and bullish structure to narrow the watchlist to two to four companies.

Q: Which months does ICT identify as ideal for long stock swings?

February through May and October through January are identified as ideal long-swing periods. The lesson concentrates on the February-to-May window and notes that institutional buying may begin early in January.

Q: How does index SMT help identify stocks for a buy watchlist?

Index SMT compares behavior across the NASDAQ, S&P, and Dow as the averages make lower lows during a seasonally bullish period. When an index or individual stock refuses to make a comparable lower low, that divergence signals relative strength and a possible bullish trend change.

Q: Why does a higher low matter when the Dow makes a lower low?

A stock that holds above its prior low while the Dow makes a lower low is showing relative strength. The presenter attributes that behavior to large institutions sponsoring buy programs and accumulating shares.

Q: How many stocks should an ICT buy watchlist contain?

The selection process should narrow the candidates to two to four companies. The lesson begins with the 30 stocks in the Dow Jones Industrial Average and filters out stocks that do not show the required bullish structure and relative strength.

Q: Which stocks does ICT recommend avoiding in this watchlist process?

The lesson says to avoid safe stocks such as Verizon, General Electric, and Coca-Cola. Stronger candidates should display an obvious bullish structure and resist falling during the relevant bullish months.

Q: What did Apple’s January 2017 divergence indicate?

In January 2017, the Dow made a lower low while Apple did not, showing relative strength. The lesson says substantial buying occurred around $118 to $120 per share, followed by share-price appreciation from February into May.

Q: How did Boeing’s fair value gap provide a potential discount entry?

Boeing gapped higher in January, then traded down and closed that gap on the second trading day of February. The lesson identifies the gap as a discount array and notes that Boeing subsequently rallied into May.

Summary & Key Takeaways

• The lesson focuses on the Dow Jones 30 stock list, noting all needed trades can come from these 30 stocks. Buy watchlists concentrate on bullish months, targeting areas where the market wants to trade higher rather than individual monthly trades, primarily in the first and second halves of the year.

• Two filters govern selection: the market must be technically sound to rally, and during bullish months traders select higher-low stocks. February-May and October-January are ideal long swing windows. Index SMT highlights companies under heavy institutional accumulation, and selection should be narrowed to two to four companies.

• Applying the January-into-February lower-low divergence to the Dow 30 filtered out six stocks: Apple, Boeing, Disney, Home Depot, McDonald's, and Visa. Each failed to make a lower low when the Dow did, then appreciated between February and May. Fair value gaps and low resistance liquidity runs guide entries.